Planning Magazine, American Planning Association http://www.planning.org/planning/2009/mar/moneymesa.htm March 2009 Money on the Mesa How Albuquerque's massive new "jobs first" development benefits from some interesting financial tools. By Andrew Webb South of Albuquerque's small but bustling airport, and east of the 300-year-old neighborhoods and junk yards that flank the Rio Grande for miles south of downtown, is a high mesa that the recession appears to have forgotten. On a recent winter morning, massive yellow earthmovers were busy carving an increasingly complicated network of roads into what just a few years ago was a featureless plateau stretching for miles. Truckloads of materials trundled up a two-year-old boulevard complete with elaborately painted overpasses, new desert-friendly landscaping, and a series of concrete and rock rattlesnake sculptures, each longer than a city bus, in the medians. At the top of the escarpment, armies of construction crews were putting the finishing touches on a solar equipment manufacturing plant, a financial services office complex, and a translucent glass "town center" that will eventually house retail businesses, a school, and offices for the developer, Forest City Covington. This is Mesa del Sol, one of the largest master planned new urbanist communities in the U.S. It will eventually be home to 100,000 people, a fifth of Albuquerque's current population. Its backers set out in early 2006 to attract jobs to the 12,900-acre development years before the first home went up. Three years later, Mesa del Sol's "jobs first" philosophy seems to have worked. All told, the projects under construction or in operation at Mesa del Sol account for about 4,100 permanent employees, with more coming. "We'll have 5,000 employees up here in the next year," says Mesa del Sol president Michael Daly. Construction aside, there is already industry at the top of the mesa. Advent Solar, one of two solar-energy-related businesses here, has been cranking out photovoltaic cells in a state-of-the-art factory since 2006. Employees of Boston-based Fidelity Investments' human resources outsourcing arm were set to begin work at new mesa-top offices before Christmas. And a quarter-mile to the east, Albuquerque Studios' 168,000 square feet of soundstages, and the scrubland that surrounds them, have played host to more than half a dozen movie productions, including the latest entry in the Terminator series, and thousands of film crew members. Meanwhile, a health care company, the U.S. Drug Enforcement Administration, and the National Nuclear Security Administration are in the early stages of office construction. Indeed, Mesa del Sol seems to have squeaked in just under the wire of the decelerating global economy. It has also avoided the local backlash against the tax increment financing Forest City Covington is using to build its pedestrian- and bicycle-friendly roads and sidewalks, parks, and other infrastructure. But belt-tightening by the state government threatens to end a freewheeling era of high-cost business incentives, and major home builders elsewhere in the city, such as KB Homes, have pulled out of other parts of town, leaving half-developed neighborhoods and empty lots in their wake. Whether or not Mesa del Sol can sell the 37,000 homes and create the 25,000 new jobs it has promised over the next 35 to 50 years is anyone's guess. New kind of development Forest City Covington is a subsidiary of Cleveland, Ohio-based Forest City Enterprises, a $10 billion, 90-year-old publicly traded real estate firm known for new urbanist-style communities and for building major commercial high-rise and mixed use projects in blighted urban neighborhoods. Unlike Denver's 4,700-acre Stapleton neighborhood, which Forest City has almost completed on the site of a former airport, Mesa del Sol is being built on state-owned land that has, up to now, seen no building. Mark Lautman, a well-known local economic developer who has spearheaded employer recruitment to Mesa del Sol, recalls an early meeting with Forest City cochair Albert Ratner as the state was seeking a developer for the property in 2002. "He said, 'If you had the West Side to do over again, what would you do differently in terms of design, planning, and permitting?'" Lautman says. "That was the basis for Mesa del Sol's thought process." Between 1980 and the present, Albuquerque's northwest mesa, known locally as the West Side, has grown at triple the rate of the rest of the city, controversially bisecting a national monument protecting 700-year-old American Indian petroglyphs. This part of the city is known for car- centric bedroom communities developed in unruly patches, poorly planned arterial roads, and a shortage of bridges leading to employment centers on the other side of the Rio Grande. Since signing on to develop Mesa del Sol in 2003, Forest City Covington's goal has been to reverse that trend by creating an entirely self-contained community where people could walk to work or shopping, children could ride bikes to schools, and acres of parks would encourage healthy, outdoor lifestyles. The company tapped architect and urban planner Peter Calthorpe to handle land design. Calthorpe is known for urban and suburban development bearing the hallmarks of the new urbanist philosophy: walkability, environmental sustainability, and focus on mass transit. In line with that thinking, the development is slated to include a number of green features, including LEED-certified industrial and office buildings, a proposed solar power generation plant on the development's eastern border, and water-saving touches like porous parking lots and rooftop catchment systems. According to Carthorpe's master plan, residential neighborhoods will feature an eclectic mix of single-family units and compound-style apartments mimicking the adobe and pueblo-style architecture popular in New Mexico, along with modern live-work and condominium buildings. The neighborhoods will be clustered around four town centers, and each will feature public plazas and parks, rather than large individual yards, in an effort to conserve water. "We're pushing the houses and front porches right out to the street, and pushing people into contact with their neighbors," Lautman says. The industrial mix, he says, is designed to bring together creative thinkers, alternative energy scientists, film crews, and government, office, and manufacturing employees, and to keep them on the mesa — and off the traffic grid — by creating a sense of place. "The first bar that opens here, you'll have digital animators hanging out next to 60-year-old nuclear physicists," he says. "It's going to look like the cantina in Star Wars." Turning to TIF Mesa del Sol — annexed by the city in 1993 — languished on the drawing board for decades as officials debated the type of development needed and wrangled with complicated land ownership issues. The first 3,000-acre phase came to life in 2005 with the construction of a long-awaited, $25 million road extension to reach it, and groundbreaking for a Forest City Covington-financed factory for Advent Solar. Many local officials and observers lauded the development as an antidote to the sprawl that has enveloped other parts of the city. "As we grow, we need to do it in a way that benefits the people already here" and "that is something we can point to with pride," Dolph Barnhouse, executive director of the now-defunct antisprawl group 1000 Friends of New Mexico, said in late 2005. "Mesa del Sol is proving to be a wonderful opportunity to provide a large-scale addition to housing in a positive way. We're happy they've been willing to work with us." But within months, 1000 Friends and an ad hoc coalition of other government watchdog groups began to question the way Forest City Covington aimed to pay for Mesa del Sol's streets, parks, and other infrastructure — the widely used and increasingly controversial tool called tax increment financing. Tax increment financing is the earmarking of future tax revenues to cover up-front costs of redevelopment, such as street improvements. First developed in the 1950s, this method of public finance was originally conceived of as a way to redevelop inner-city neighborhoods. TIFs became increasingly popular as federal infrastructure funding dried up in the 1970s, and today nearly every state allows them. During New Mexico's 2006 legislative session, lobbyists working on behalf of Forest City Covington quietly helped rewrite existing, but never-used, state statutes allowing tax increment financing. The Tax Increment Development Act, passed that year, lets so-called Tax Increment Development Districts, or TIDDs, leverage a portion of future sales and property tax revenues generated within the district to finance public infrastructure bonds. Later that year, Forest City Covington began approaching city, county, and state governments for approval of tax increment development districts at Mesa del Sol, arguing that to attract employers and home builders, it would need to invest an estimated $635 million in public infrastructure through 2022. The company sought up to 75 percent of any new taxes generated on the mesa to pay off 25-year infrastructure bonds worth an estimated $400 million. Backers sought to allay lawmakers' fears by producing studies, which they said proved Mesa del Sol's development would result in no net expense to the city. They argued that the 25 percent of new taxes left over for the governing agencies would more than cover needed new services, such as schools, police, and fire protection. Forest City said it needed TIF backing in order to provide infrastructure "a step above" that found elsewhere in the city and attract businesses and residents.